Saccos losing Sh3 billion annually to fraud, regulator warns

The losses are further worsened by liquidity constraints, failure to meet prudential standards and unremitted staff deductions.
Savings and Credit Cooperative Societies (Saccos) are losing more than Sh3 billion every year due to internal fraud, governance failures, and poor oversight, according to new findings from the Sacco Societies Regulatory Authority (SASRA).
The losses are further worsened by liquidity constraints, failure to meet prudential standards, and unremitted staff deductions, raising deep concerns about the sector’s sustainability and ability to serve members effectively.
Speaking in Nairobi during a Sacco empowerment forum hosted by NCBA Group on Wednesday, the Co-operatives Commissioner from the Ministry of Co-operatives Transformation and MSME Development, David Obonyo, said these weaknesses continue to damage member confidence and hinder effective lending.
“As a ministry, we are committed to working hand in hand with financial institutions like NCBA to create a thriving, transparent and technology-driven SACCO ecosystem,’’ said Obonyo.
He stressed that Saccos can only remain competitive and responsive to member needs by embracing proper governance, improving capital access, and adopting technology.
“The success of Saccos relies on the strength of their governance and ability to embrace innovation,” he said.
The forum brought together experts from the cooperative and financial sectors to explore how better board oversight, stronger cybersecurity, and innovative tools can support long-term Sacco growth.
NCBA Group managing director John Gachora stressed the sector’s central role in Kenya’s economy, pointing to its over six million members and assets exceeding Sh1 trillion.
He said good governance and innovation are key to ensuring Saccos remain resilient and relevant.
“In the Sacco space, this means deep listening, co-creating products with SACCO leaders, and ensuring we deliver tools that enhance operational efficiency, member value, and long-term resilience,’’ said Gachora.
He added, “We believe that empowering Saccos to serve their members better is not just a business priority — it is a national development goal.”
The forum came in the wake of a forensic audit by PricewaterhouseCoopers (PwC) that exposed deep-rooted fraud and mismanagement within the Kenya Union of Savings and Credit Cooperatives (KUSCCO), the national umbrella body for Saccos.
The audit revealed that KUSCCO is effectively insolvent, with liabilities exceeding assets by Sh12.5 billion.
According to the report, at least Sh13.8 billion was lost through systematic theft, enabled by poor internal controls, failed leadership, and a lax regulatory framework.
The findings have raised alarm across the cooperative movement and triggered calls for urgent reforms to restore confidence and safeguard member savings.